A police officer has been killed and two others seriously wounded during a shootout in an Albanian village known as a "cannabis kingdom" for its industrial-scale production of the drug.

More than 400 policemen, supported by army helicopters, have surrounded the village of Lazarat in southern Albania where an armed group has entrenched itself and has yet to surrender, police said in a statement.

At least 21 members of the group are suspected to be holed up in the village, where machine-gun fire and anti-tank rockets ricocheted around police as they attempted to enter the area in the early hours of Wednesday.

Albanian prime minister Edi Rama paid tribute to Ibrahim Basha, a former army officer and Afghanistan veteran, who was killed in the crossfire.

"I believe all Albanians who respect the integrity and courage of the police are in mourning today," Mr Rama said, as the EU delegation and US embassy in Tirana also condemned the death.

Four people have so far given themselves up to police, witnesses said, and officers were stopping and searching people and vehicles attempting to gain entrance to the village, according to an AFP photographer at the scene.

One person was arrested earlier in the day on suspicion of having fired shots at police.

Meanwhile, two policemen wounded alongside Basha were in a military hospital in Tirana, and "their lives were not in danger", police spokesman Ardi Bide said.

A year ago Albanian police clashed for five days with armed groups before taking control of Lazarat, which had once again become a safe haven for drug manufacturers and traffickers.

According to an Italian police report, Lazarat produces about 900 tonnes of cannabis annually, worth some 4.5 billion euros ($6.53 billion) — equivalent to almost a third of Albania's gross domestic product.

Since the airing of the gut-wrenching documentary Leaving Neverland, many of us have wrestled with an uncomfortable, yet essential question: given everything we know, can we continue listening to Michael Jackson's music?